MoCo and PG file predatory loan suits

Montgomery and Prince George’s counties have filed lawsuits against two major financial institutions and their subsidiaries claiming they violated the Fair Housing Act by purposely offering bad loans to African-American and Latino borrowers.

The counties filed their lawsuit Nov. 20 in the U.S. District Court for Maryland, and have named Bank of America North America and Wells Fargo North America, as well as other banks owned by them including Merrill Lynch & Co., Wachovia and Countrywide Financial Corporation. The counties are seeking injunctive relief and damages.

The counties in their lawsuit filed by law firms Brown Goldstein Levy LLP, Milberg Tadler Philips Grossman LLP and Evangelista Worley LLC allege that Bank of America and Wells Fargo, and their subsidiaries, targeted Africa-American and Latino borrowers and purposely directed them toward higher-cost, non-prime mortgage loans. In addition, according to the counties’ lawsuit, the banks knew that the mortgage loans they were giving to borrowers were likely to fail.

According to the counties lawsuit, Bank of America and its subsidiaries, Countrywide and Merrill Lynch, are responsible for at least 97,500 predatory loans, and Wells Fargo and its subsidiary Wachovia is responsible for 56,000 such discriminatory loans.

The Counties argue that the mortgages from Bank of America, Wells Fargo and their respective subsidiaries led to more foreclosures and home vacancies that have put greater financial strain on them.

“The discriminatory equity stripping housing practices engaged in by the banks and their affiliates greatly damaged our communities,” said Montgomery County Executive Ike Leggett in a statement. “Bank of America’s wrongful mortgage practices continue to this day. We cannot allow this to continue to harm the finances of the County and shift the costs that the defendants are responsible for onto our taxpayers.”

In response, spokesperson for Bank of America, Christopher Feeney, said the allegations made against them in the lawsuit are not true.

“The claims are without merit and we will vigorously defend our interest in this matter,” he said in a statement. “There is no basis for the complaint and Bank of America’s record demonstrates we have a firm commitment and strong track record for fair lending.”

The counties lawsuit said the discriminatory loans came in the mid-2000s, before a housing crisis led to a major economic recession in 2009.

Congress passed the Fair Housing Act in 1968, making it illegal to discriminate against someone applying for a mortgage on the basis of their race, sex, religion, familial status or national origin.